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Are non-compete agreements enforceable? The rules in 2026

Published · NDAs and restrictive covenants

A non-compete agreement stops a worker from joining or starting a competing business for a time after they leave. Whether one can be enforced depends mostly on the state where the worker works, and the trend is firmly towards fewer and narrower non-competes.

States that ban or limit non-competes

  • Banned for most workers: California, Minnesota, North Dakota and Oklahoma. California also makes it unlawful to require one, and does not enforce non-competes signed elsewhere for work in California.
  • Banned below a pay level: Colorado, Illinois, Maine, Maryland, New Hampshire, Oregon, Rhode Island, Virginia, Washington and Washington, D.C. bar non-competes for workers who earn less than a set amount, and several add notice or other conditions.
  • Other conditions: Massachusetts, for example, bars them for non-exempt employees and requires garden leave pay or other agreed consideration during the restriction. Many states also restrict non-competes for doctors and other health workers.

Thresholds and rules change often, so check the current law in the state where the worker will work before you rely on a non-compete.

What happened to the FTC ban?

In April 2024 the Federal Trade Commission adopted a rule that would have banned most non-competes nationwide. A federal court in Texas set it aside before it took effect, and in September 2025 the FTC dropped its appeals, so the rule is gone. The FTC has said it will still challenge particular non-competes it considers unfair, case by case, and state law continues to apply.

What courts look for

Where non-competes are allowed, courts generally enforce one only if it is reasonable. They ask:

  1. Is there a legitimate business interest? Trade secrets, confidential information and customer goodwill count. Simply avoiding competition does not.
  2. Is the length reasonable? Six months to a year is common for employees; two years or more is harder to defend.
  3. Is the area reasonable? It should match where the business actually operates and where the worker worked, not the whole country by default.
  4. Is the scope reasonable? It should cover work that competes with what the person did, not any job in the industry.
  5. Was there consideration? A job offer usually counts. For a current employee, some states, such as Pennsylvania, require something new, like a raise, a bonus or a promotion.

When a non-compete goes too far, some courts cut it down to something reasonable, some strike out the offending words, and some refuse to enforce any of it. Non-competes signed as part of selling a business are treated much more generously, even in California.

Alternatives that hold up better

  • A non-solicitation agreement stops a former worker poaching your customers or staff without stopping them working. See non-compete vs non-solicitation.
  • A confidentiality agreement protects trade secrets and client information wherever the person works next. See the employee NDA.
  • Garden leave or a longer notice period keeps a departing employee on the payroll, and away from competitors, for a set time.

Free templates

The free non-compete agreement sets a restricted period, area and type of business, records what the employee receives for agreeing, can add pay during the restriction, and narrows itself wherever local law limits non-competes. In many cases the non-solicitation agreement is the safer choice, and the non-compete clause page explains the wording.

General information, not legal advice. Non-compete law differs between states and changes often; have an agreement reviewed for the place where the worker works.

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